Breaking Bread: Panera Buys Au Bon Pain in Brand Reunion


Panera Bread

Panera Bread Chairman and CEO Ron Shaich is stepping down from running Panera Bread—but he won’t give up his parking spot until one final action: buying a rival fast casual brand with which it has a shared history, Au Bon Pain.

The acquisition will enable Panera to go into new types of retail environments, the company said. The move also represents the next strategic phase for Panera since its acquisition or $7.5 billion last summer by the investment firm JAB, which also controls Krispy Kreme, Keurig and Caribou.

Shaich and the late Louis Kane created Au Bon Pain in 1981 and the company went public a decade later. Then Au Bon Pain acquired the St. Louis Bread Company, which was renamed Panera. Six years later, the company sold off Au Bon Pain.

“With the acquisition we are announcing today, we are bringing Au Bon Pain and Panera together again,” Shaich said in a statement. “This acquisition offers the strategic opportunity for us to grow in several new real estate channels, including hospitals, universities, transportation centers and urban locations, among others.”

Panera has more than 2,000 cafes that sell into all day parts. Au Bon Pain, with its 200 U.S. cafes and another 100 abroad, has similar menus but different kinds of locations.

Panera wants “to be dominant in coffee and restaurants that sell coffee,” analyst Michael Halen told Bloomberg. “They’ve been very aggressive over the last few years.”

While Shaich has pioneered concepts like Panera Cares, a pay-what-you-can concept that it scaled back in 2013. He likes to stir the pot, such as a recent challenge to rival CEOs to eat their restaurants’ kids meals.

“This is the right time for me to step down as CEO” on January 1, Shaich said, “while still staying involved in the [Panera] business as chairman” and continuing to advise JAB. His deputy, Blaine Hurst, will take the reins, with Shaich remaining chairman.

Panera used the announcement to highlight a history of innovation—and the quality of its food and philosophy:

“We’re also focused on improving quality and convenience. With investments in technology and operations, we now offer new ways to enjoy your Panera favorites – like mobile ordering and Rapid Pick-Up for to-go orders and delivery – all designed to make things easier for our guests.”

“The result—Panera has been one of the most successful restaurant companies in history. What started as one 400-square-foot cookie store in Boston has grown to a system with over 2,000 units, approximately $5 billion in system-wide sales, and over 100,000 associates. In more than 25 years as a publicly-traded company, Panera has created significant shareholder value. Indeed, prior to the JAB acquisition in July 2017, Panera was the best -performing restaurant stock of the past 20 years, delivering a total shareholder return up 86-fold from July 18, 1997, to July 18, 2017, compared to a less than two fold increase for the S&P 500 during the same period.”

The bottom line is the food, as Shaich noted Panera’s commitment to quality, taste and transparency. As of January 1 this year, for example, its menu could claim to be 100% free of artificial flavors, preservatives, sweeteners and colors from artificial sources.

“We began with a simple commitment: to bake fresh bread every day in our bakery-cafes.  No short cuts, just bakers with simple ingredients and hot ovens. Each night, any unsold bread and baked goods were shared with neighbors in need.

These traditions carry on today, as we have continued to find ways to be an ally to our guests. That means crafting a menu of soups, salads and sandwiches that we are proud to feed our families. Like poultry and pork raised without antibiotics on our salads and sandwiches. A commitment to transparency and options that empower our guests to eat the way they want. Seasonal flavors and whole grains. And a commitment to removing artificial additives (flavors, sweeteners, preservatives and colors from artificial sources) from the food in our bakery-cafes.

Why? Because we think that simpler is better and we believe in serving food as it should be. Because when you don’t have to compromise to eat well, all that is left is the joy of eating.”